US Energy Secretary Steven Chu said funding for wind energy will increasingly focus on lowering the price of offshore deployment as he unveiled budget plans that include a 29% increase for renewables.

Chu, explaining the Department of Energy (DOE) portion of the Obama Administration's fiscal year 2013 federal budget request, positioned the shift to offshore wind research as part of a strategy to channel money to areas "where we can have the greatest impact".

"We believe that onshore wind is a success story," Chu said, noting that private industry is driving continued improvement of "known technologies".

"Onshore wind is the second-least-expensive form of new energy available in the open market. Natural gas is the least expensive," Chu said. "... Offshore wind is considerably more expensive, so we're shifting our resources to making that a financial reality."

The budget request – which should be viewed mainly as a political document detailing the administration's aspirations in an election year when little is expected to pass Congress – calls for a 3.2% increase in the DOE budget to $27.2bn, much of which funds maintenance and security of nuclear weapons stockpiles, and the cleanup of nuclear facilities.

The proposal also calls for the elimination of $4bn annually in "inefficient and outdated" tax subsidies to oil, gas and other fossil fuel producers "that impede investment in clean energy sources and undermine efforts to address the threat of climate change".

Meanwhile, the DOE would increase the budget for its Office of Energy Efficiency and Renewable Energy by 29% to $2.33bn from the current fiscal year. The broad outlines of the DOE budget request, as well as other elements of the budget, underscore President Barack Obama's commitment to renewable energy as he seeks a second term in office.

"In light of the tight discretionary spending caps, this increase in funding is significant and a testament to the importance of innovation and clean energy to the country’s economic future," the administration says in its DOE budget note.

Chu says the budget calls for extensions of the wind industry's top priority, the Production Tax Credit; the "very successful" Treasury cash grant programme, which pays 30% of eligible renewable energy project costs, but expired last year; and $5bn to restart the Advanced Manufacturing Tax Credit, "again, a very successful, highly over-subscribed programme".

"Our motto over the last couple of years is we want to lead in clean energy technologies," Chu says. "We want it to be invented in America, but we can't stop there. It has to be made in America and sold worldwide."

The DOE budget request includes $310m for the SunShot Initiative, which aims for cost-competitive solar, without subsidies, by the end of the decade. That's up 7.3% from the current fiscal year budget. Wind energy would receive $95m, up 1.9%.

Geothermal would receive $65m, up 71.7%. Biomass and biorefinery systems would receive $270m, up 35.5%. The budget request cuts funding for the DOE water power programme 66% to $20m.

Chu highlights a new energy innovation hub in "electricity systems" that would be funded by this budget.

"This is the coordination of transmission and distribution with energy storage, with fossil fuel, with renewables," he says. "This is something that has to be considered, especially given the fact that ... it's only a matter time where renewable energy becomes as cost effective as any new form of energy without subsidy."

The request channels an extra $12m in the $421m DOE fossil energy research and development budget toward "advancing technology and methods to safely and responsibly develop America's natural gas resources".